House prices grew by 0.3% in November, according to Nationwide. That put price growth at 1.1% over the last three months. On an annual basis house price growth continued to slow, from 2.4% in October to 1.8% in November. We expect house price growth to continue to slow into the new year while confidence remains subdued.

Despite a prolonged warm-up, we expect the Budget to have a limited effect on the mainstream housing market. The greatest change is the introduction of a council tax surcharge for properties worth over £2 million, effective from April 2028. Charges will range from £2,500 per annum on properties worth £2 million to £7,500 per annum for those at £5 million plus. The impact of this is likely to be felt most in higher value second home markets which are already dealing with an increased stamp duty surcharge and the doubling of council tax in most cases. The impact on the rest of the prime market is set to be modest, with anecdotal evidence from our agents already indicating a pick-up in activity.

Market sentiment was weaker in the run up to the Budget. The RICS reported a fall in both buyer and seller activity, which was corroborated by the Bank of England reporting  a 5% annual fall in mortgage approvals in October (seasonally adjusted). This pause may translate into renewed activity at the very end of 2025 with buyers and sellers now feeling able to make informed decisions.

Mortgage affordability has continued to improve, which should support house price growth. Several lenders have reduced mortgage interest rates, pricing in an increased likelihood that the Bank of England will implement a further base rate cut on 18^th December as inflationary pressures ease. Average wage growth, a key inflation driver, slowed to a 3-year low of 4.6% in the three months to September compared with a year earlier, according to the ONS. CPI also fell from a high of 3.8% during Q3 to 3.6% in October.

We expect a lack of confidence in the wider economy to hold back house price growth in the short term. The outlook for the UK economy in 2026 is for lower GDP growth and higher unemployment, with conditions forecast to improve from 2027, according to Oxford Economics. Our mainstream forecasts expect price growth to strengthen from 2027 onwards following continued slower growth in 2026.

More localised house price data from August shows that areas with the greatest value growth were in Scotland and the North, although Sandwell in the West Midlands led the way with annual price growth of 7.9%. Ceredigion saw the most significant price falls of -8.9%, followed by Eastbourne with falls of -4.5%

Annual rental growth across the UK in October was 2.2% according to Zoopla, essentially flat from 2.1% in September. This comes as RICS report lower tenant demand.

Supply remains constrained and this is likely to continue, with the Budget further reducing the profitability of being a landlord. The 2% increase to tax on property income introduced in the Budget will further erode the returns of buy to let investors, which is likely to lead to fewer homes being available to rent. Timings have also been confirmed for the abolition of Section 21 notice, coming into effect on 1^st May 2026. How well this transition works for landlords will be a further determinant of future rental supply.ose across England and Wales in Q3, suggesting there is greater commitment from those remaining in the market.